Best of the Week
Most Popular
1. Gold vs Cash in a Financial Crisis - Richard_Mills
2.Current Stock Market Rally Similarities To 1999 - Chris_Vermeulen
3.America See You On The Dark Side Of The Moon - Part2 - James_Quinn
4.Stock Market Trend Forecast Outlook for 2020 - Nadeem_Walayat
5.Who Said Stock Market Traders and Investor are Emotional Right Now? - Chris_Vermeulen
6.Gold Upswing and Lessons from Gold Tops - P_Radomski_CFA
7.Economic Tribulation is Coming, and Here is Why - Michael_Pento
8.What to Expect in Our Next Recession/Depression? - Raymond_Matison
9.The Fed Celebrates While Americans Drown in Financial Despair - John_Mauldin
10.Hi-yo Silver Away! - Richard_Mills
Last 7 days
Coronavirus Coming Storm Act Now to Protect Yourselves and Family to Survive COVID-19 Pandemic - 19th Feb 20
Future Silver Prices Will Shock People, and They’ll Kick Themselves for Not Buying Under $20… - 19th Feb 20
What Alexis Kennedy Learned from Launching Cultist Simulator - 19th Feb 20
Stock Market Potential Short-term top - 18th Feb 20
Coronavirus Fourth Turning - No One Gets Out Of Here Alive! - 18th Feb 20
The Stocks Hit Worst From the Coronavirus - 18th Feb 20
Tips on Pest Control: How to Prevent Pests and Rodents - 18th Feb 20
Buying a Custom Built Gaming PC From Overclockers.co.uk - 1. Delivery and Unboxing - 17th Feb 20
BAIDU (BIDU) Illustrates Why You Should NOT Invest in Chinese Stocks - 17th Feb 20
Financial Markets News Report: February 17, 2020 - February 21, 2020 - 17th Feb 20
NVIDIA (NVDA) GPU King For AI Mega-trend Tech Stocks Investing 2020 - 17th Feb 20
Stock Market Bubble - No One Gets Out Of Here Alive! - 17th Feb 20
British Pound GBP Trend Forecast 2020 - 16th Feb 20
SAMSUNG AI Mega-trend Tech Stocks Investing 2020 - 16th Feb 20
Ignore the Polls, the Markets Have Already Told You Who Wins in 2020 - 16th Feb 20
UK Coronavirus COVID-19 Pandemic WARNING! Sheffield, Manchester, Birmingham Outbreaks Probable - 16th Feb 20
iShares Nasdaq Biotechnology ETF IBB AI Mega-trend Tech Stocks Investing 2020 - 15th Feb 20
Gold Stocks Still Stalled - 15th Feb 20
Is The Technology Stocks Sector Setting Up For A Crash? - 15th Feb 20
UK Calm Before Corona Virus Storm - Infections Forecast into End March 2020 - 15th Feb 20
The Growing Weaponization of Space - 14th Feb 20
Will the 2020s Be Good or Bad for the Gold Market? - 14th Feb 20
Predictive Modeling Suggests Gold Price Will Break Above $1650 Within 15~30 Days - 14th Feb 20
UK Coronavirus COVID-19 Infections and Deaths Trend Forecast 2020 - 14th Feb 20
Coronavirus, Powell and Gold - 14th Feb 20
How the Corona Virus is Affecting Global Stock Markets - 14th Feb 20
British Pound GBP Trend and Elliott Wave Analysis - 13th Feb 20
Owning and Driving a Land Rover Discovery Sport in 2020 - 2 YEAR Review - 13th Feb 20
Shipping Rates Plunge, Commodities and Stocks May Follow - 13th Feb 20
Powell says Fed will aggressively use QE to fight next recession - 13th Feb 20
PALLADIUM - THIS Is What a Run on the Bank for Precious Metals Looks Like… - 13th Feb 20
Bitcoin: "Is it too late to get in?" Get Answers Now - 13th Feb 20
China Coronavirus Infections Soar by 1/3rd to 60,000, Deaths Jump to 1,367 - 13th Feb 20
Crude Oil Price Action – Like a Coiled Spring Already? - 13th Feb 20
China Under Reporting Coronavirus COVID-19 Infections, Africa and South America Hidden Outbreaks - 12th Feb 20
Will USD X Decline About to Trigger Precious Metals Rally - 12th Feb 20
Copper Market is a Coiled Spring - 12th Feb 20
Dow Theory Stock Market Warning from the Utilities Index - 12th Feb 20
How to Get Virgin Media Engineers to FIX Hub 3.0 Problems and NOT BS Customers - 12th Feb 20
China Under Reporting Coronavirus COVID-19 Infections by 66% Due to Capacity Constraints - 12th Feb 20
Is Coronavirus the Black Swan That Takes Gold To-Da-Moon? - 12th Feb 20
Stock Market 2020 – A Close Look At What To Expect - 12th Feb 20
IBM AI Mega-trend Tech Stocks Investing 2020 - 11th Feb 20
The US Dollar’s Subtle Message for Gold - 11th Feb 20
What All To Do Before Opening A Bank Account For Your Business - 11th Feb 20
How and When to Enter Day Trades & Swing Trade For Maximum Gains - 11th Feb 20
The Great Stock Market Dichotomy - 11th Feb 20
Stock Market Sector Rotation Should Peak Within 60+ Days – Part II - 11th Feb 20
CoronaVirus Pandemic Stocks Bear Market Risk 2020? - Video - 11th Feb 20

Market Oracle FREE Newsletter

Nadeem Walayat Financial Markets Analysiis and Trend Forecasts

Why the Housing Market Recovery is Bypassing Young Buyers

Housing-Market / US Housing Jul 29, 2013 - 08:56 PM GMT

By: Money_Morning

Housing-Market

Gary Gately writes: Think of the housing market as a ladder with first-time homebuyers at the bottom and homeowners on the upper rungs, with homes priced higher as you proceed upward.

The first-time homebuyers make it possible for those in the lower-priced homes to sell and move up to costlier homes, which in turn enables the sellers of those homes to move up to costlier homes - and so on.


But amid the housing market recovery - sales of new and existing homes are up and prices have been rising - many first-time buyers are being shut out of the market.

And that has far-reaching implications for the market as a whole, given the role those first-timers play in creating demand from the bottom of the ladder.

"They're the first rung of the ladder," Douglas Duncan, senior vice president and chief economist at Fannie Mae, told Money Morning.

"Once you buy a house, the people who are intending to move up have to be able to sell to someone, and typically they might be selling to a first-time homebuyer, so if there are fewer first-time homebuyers, it makes it harder to move up the ladder."

Why Prospective Buyers are Shut Out of the Housing Market Recovery

The proportion of first-time buyers in the housing market has declined markedly amid the housing market recovery.

Over the past 30 years, first-time buyers accounted for an average of 40% of home sales. But over the past year, they have accounted for just 30% of sales.

Prospective first-time homebuyers, traditionally couples in their late 20s and 30s, lag behind in the housing market recovery for several reasons.

With tight lending standards, it's difficult for would-be first-time buyers to get loans, particularly given many don't have high credit ratings, Lawrence Yun, chief economist at the National Association of Realtors, told Money Morning. Yun said would-be buyers also are more likely than other buyers to be unemployed or underemployed and to be saddled with high student loan debt.

The NAR's Confidence Index shows that between January and June, the median credit score for first-time buyers was 720, compared with 750 for repeat buyers.

Compounding the squeeze on prospective first-time buyers, prices of new and existing homes as well as mortgage rates have been on the rise.

"The higher the rates go, obviously, the less the first-time buyers can afford, especially given the mortgages where you have to put down so much money," Joel Naroff, president and chief economist of Naroff Economic Advisors Inc., told Money Morning.

"So rates become critical, especially for first-time buyers, young purchasers who are on the edge as far as qualification is concerned. That's generally the situation if you look at the group."

Naroff notes homeowners, by contrast, generally have equity and established credit.

There's also more competition for homes from investors. Cash sales, an indication of investor purchases, accounted for 31% of all sales in June and individual investors accounted for 17% of all purchases, NAR says.

Would-be young buyers have not only been shut out of the housing market recovery because they can't buy homes, many of them aren't even renting.

2.4 Million "Missing Households"

Jed Kolko, chief economist of the real estate website Trulia.com, calls these 2.4 million people between 18-34 "missing households" in the housing market recovery: Rather than forming new households, which is critical to the housing market and the economy as a whole, these young people are living with their parents or with others, Kolko says.

"Not only are young people not buying homes; they're not even renting," Kolko wrote on his blog. "Household formation is the most important indicator of the housing recovery that isn't making great strides.... Therefore, household formation is severely lagging behind the rest of the housing recovery."

That creates "pent-up demand for housing that the [housing market] recovery should unleash" eventually, Kolko writes. But for now, he writes, the housing market's missing these prospective buyers, which hinders the housing market recovery: "It could still take years before young people have built up the savings and economic security to leave the nest."

Looking to profit from the housing market recovery? Check out this report and learn about the best REIT to invest in now.

Source :http://moneymorning.com/2013/07/26/why-the-housing-market-r...

Money Morning/The Money Map Report

©2013 Monument Street Publishing. All Rights Reserved. Protected by copyright laws of the United States and international treaties. Any reproduction, copying, or redistribution (electronic or otherwise, including on the world wide web), of content from this website, in whole or in part, is strictly prohibited without the express written permission of Monument Street Publishing. 105 West Monument Street, Baltimore MD 21201, Email: customerservice@moneymorning.com

Disclaimer: Nothing published by Money Morning should be considered personalized investment advice. Although our employees may answer your general customer service questions, they are not licensed under securities laws to address your particular investment situation. No communication by our employees to you should be deemed as personalized investent advice. We expressly forbid our writers from having a financial interest in any security recommended to our readers. All of our employees and agents must wait 24 hours after on-line publication, or after the mailing of printed-only publication prior to following an initial recommendation. Any investments recommended by Money Morning should be made only after consulting with your investment advisor and only after reviewing the prospectus or financial statements of the company.

Money Morning Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules